Fundamental
Overview
The USD has been relatively
stronger against most major currencies since Friday as the markets went into risk-off
following some bad US data release. In fact, we got a weak US Flash Services PMI and soon after that the long-term inflation expectations in the Final UMich Consumer
Sentiment survey jumped to a new 30-year high.
The risk-off sentiment
picked up after the jump in the long-term inflation expectations. The market
might be fearing that in case we get a slowdown, the Fed might not be fast
enough in cutting rates amid inflation remaining above target and uncomfortably
high long-term inflation expectations.
This is something to keep
in mind in light of the next NFP and CPI reports coming out before the March
FOMC decision where we will also get the updated SEP and Dot Plot.
On the JPY side, nothing
has changed fundamentally but the Japanese Yen has been supported across the
board by the risk-off sentiment which continues to drive Treasury yields lower.
USDJPY
Technical Analysis – Daily Timeframe
USDJPY Daily
On the daily chart, we can
see that USDJPY is trading near the key 148.60 swing level. This is where we
can expect the buyers to step in with a defined risk below the level to
position for a rally into the 160.00 handle. The sellers, on the other hand,
will want to see the price breaking lower to increase the bearish bets into the
140.00 handle next.
USDJPY Technical
Analysis – 4 hour Timeframe
USDJPY 4 hour
On the 4 hour chart, we can
see that we have a minor downward trendline
defining the current bearish momentum. The sellers will likely continue to lean
on the trendline with a defined risk above it to keep pushing into new lows.
The buyers, on the other hand, will look for a break higher to pile in for a
rally into the major trendline next.
USDJPY Technical
Analysis – 1 hour Timeframe
USDJPY 1 hour
On the 1 hour chart, we can
see that the price broke below the counter-trendline this morning with the
sellers piling in to target a drop into the 148.60 level. That’s where we can
expect the buyers to step in to position for a rally into new highs. The red
lines define the average daily range for today.
Upcoming
Catalysts
Today we have the US Consumer Confidence
report. On Thursday, we get the latest US Jobless Claims figures, while on
Friday we conclude the week with the Tokyo CPI and the US PCE data.